December 2021
Beginner
928 pages
46h 18m
English
Content preview from J.K. Lasser's Your Income Tax 2022
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CHAPTER 16Deductions for Taxes
If you itemize deductions on Schedule A (Form 1040 or 1040-SR), you may deduct your payments of state and local income taxes (or state and local general sales taxes in lieu of state and local income taxes), state and local real property taxes, and state and local personal property taxes, but your total deduction for all of such taxes may not exceed $10,000 ($5,000 if you are married filing separately) (16.1).
Subject to the $10,000 (or $5,000) limit, you can increase your deduction for state and local taxes by making a year-end prepayment of estimated tax liability. You also may be able to increase withholdings from your pay to increase your deduction.
If you pay transfer taxes on the sale of securities or investment real estate, the taxes are not deductible. However, they reduce the sales price when figuring your profit or loss.
Taxes paid in operating a business are generally deductible, except for sales taxes, which are added to the cost of the property.
Foreign real property taxes are no longer deductible, but an itemized deduction for foreign income taxes is allowed on Schedule A. Alternatively, you can opt to claim a tax credit for foreign taxes (16.10, 36.13).
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